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Health Care Compliance Association16th Annual Compliance InstituteCaesars PalaceApril 29-May 2, 2012Las Vegas, NV

Gabriel L. Imperato, Esq.

Broad and Cassel

Fort Lauderdale, Florida

HANDLING A HEALTH CARE FRAUD INVESTIGATION

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Enforcement

DOJ OIG-HHS Attorneys General SEC FTC Other Federal and

State Agencies Multi Agency Task

Forces

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How Investigations are Initiated

Competitor complaints Consumer complaints Current or former

employee -“Whistleblower” complaints

Insurance company complaints

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Investigative Techniques

Informal Interviews and requests for documents

Insider Informants and Whistleblowers

Search Warrants Subpoenas Electronic

Surveillance

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When The Government Knocks To Obtain Documents ……

Subpoena or search warrant or request by government agent

Employees notify executives immediately.

Executives refer agent to company’s counsel

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Remember

Search Warrant Agents can seize original

documents Corporations do not have 5th

amendment privilege If agent demands copy of

personal records – (5th

Amendment) respectfully decline and refer to counsel

Important to label documents

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If Search Warrant

Request copy of warrant and affidavit (may not be available)

Accept warrant and immediately fax to counsel and/or organization contact (i.e. general counsel or compliance officer)

If you are not there... have employee fax to you and your counsel

Send all employees (except essential response team or coordinator) away from work location where search is taking place

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AND….

DO NOT INTERFERE WITH AGENTS AND AVOID CONFRONTATION

Review warrant carefully Technically, agents can only seize what is

listed on warrant Bring to agent’s attention if search areas

are not listed in warrant List may include personal (5th Amendment)

and corporate records and privileged documents

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AND….

No requirement to speak to agents or respond to questions

Respectfully decline & refer agent to counsel

Search warrant is for documents and E data, not testimonial evidence

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If Search Warrant (cont’d.)

Attempt to identify attorney/client privileged documents

Identify and determine agency of each investigator and the agent in charge and request contact information; government attorney assigned to case

Agents will request signature on a vague inventory of items seized – avoid execution of document

Keep your own inventory of areas searched, documents and items seized and questions asked by the agents

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Post Search

Counsel typically requests debriefing from investigators and/or government attorneys

Consider public relations Debrief employees and response coordinator/team –

prepare statement with counsel Attempt to obtain copies of documents seized through

counsel Notice and instruction to employees Notice of investigation Litigation hold and suspension of document

destruction Instruction regarding interaction with

government agents

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Subpoena

Served by Mail or Personally by Agent

Does not Require Immediate Response

Typically Has Future Return Date

For Documents and/or Testimony

Turn Over to Counsel for Appropriate Response

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Subpoena

Prepare to assist counsel with response Different types of subpoenas (Civil

Investigative Demand, HIPAA Subpoena, OIG Subpoena)

Complete and timely response is important May negotiate scope and timing of response

(i.e. Rolling production) Custodian of records for response to

subpoena

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What To do When The Government Knocks to interview You or Your Employees

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Employee Rights

May decline to speak with Agents May voluntarily speak to agents,

but no obligation to do so 5th Amendment Right to Refuse Ask Agent to contact Company

Counsel Joint Defense Agreement – Share

information between parties – still privileged

Company can advance $ for cost of employee counsel (if necessary)

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Employee Rights(Cont’d.)

Right to be represented by counsel at interview Organization’s Counsel can assist, but typically does not

directly represent Employees Organization’s Counsel represents organization Employee can retain their own counsel Organization should not forbid Employee to speak to

government agents Obstruction of justice Ask employees to advise if visited by government

agents Organization memorandum regarding investigation

is advisable

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Follow-up Response to Initial Government Contact Conducting an Internal Investigation

Proliferation of Federal and State Government initiated investigations have led organizations to consider a response to and a strategy for such investigations

Overview.

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Conducting an Internal Investigation (cont’d.)

The initiation of an internal or parallel investigation of an organization is critical with reference to the allegations raised against the organization or in connection with an internal compliance matter

It is important for an organization’s resolution of an external investigative matter

It is also important for an organization’s compliance strategy and compliance program and resolution of internal matters

No substitute for the facts to resolution of external and internal matters.

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The Duties and Rights of Employers and Employees Related to Internal Investigations

The duty to maintain a safe workplace is connected to the duty of an organization to investigate compliance matters

Negligent hiring and retention of employees The duty of loyalty and fair dealing for employees and

the organization The duty of an employee to cooperate with an

organization investigation The employee’s rights to privacy and to work free from

unreasonable interference and harassment The right to have your reputation protected.

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Legal Standards in Investigations A reasonable, fair, thorough, and prompt investigation which

reaches reasonable conclusions usually protects employers against claims

There is a qualified privilege to disclose matters relating to the investigation

The investigation process must be consistent throughout the organization

An investigation can only be sustained if there is probable cause and/or reliable and credible evidence of non-compliant conduct

An ultimate factual conclusion must be based on a preponderance of the evidence (i.e. more than 50% probability)

Right of employee to generally know results of investigation, but no right to review investigation report

The attorney-client privilege does not necessarily apply to factual findings of internal investigation, but does apply to advise of lawyer based on the factual findings.

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Legal Standards in Interviews Employees cannot refuse to cooperate and/or be

interviewed by organization representatives without risking continued employment

Do employees have Miranda rights? Employees have a moral right to due process and this

would be organization’s “best practice” The employees right to be confronted with the proof and

the opportunity to respond The prohibition against retaliation Confidentiality of the interview, subject to waiver of

privilege The right to counsel Proper instructions protect the evidence.

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Evidence Collection in Investigations

You must prove each element of the allegation using proper evidence

Proper evidence is relevant Proper evidence is material Proper evidence is competent Proper evidence is authentic Proper evidence can be direct or circumstantial You can use hearsay evidence-statements against

interest and business records – weight accorded to evidence.

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Legal Claims When Things Go Wrong

Defamation of an employee Retaliation for cooperating with the investigation False imprisonment in interviews Intentional infliction of emotional distress Assault and battery Invasion of privacy Malicious prosecution

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When Must You Investigate?

Any time there is: An allegation of a violation of law A report of improper conduct A potential for a government

overpayment A potential for an overpayment by any

other third-party payor A potential for whistleblower activity

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Investigative Process

Validate Whether There Is An Issue

Yes

Detailed Work plan

Execute Work plan

Corrective Action Plan

Execute Corrective Action Plan

Take Remedial Actions

Follow‐Up to See if CAP Worked

No

Stop and Document Closure

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Validate and Planning Validation of the original compliance report is essential

and is the reason for an internal investigation Avoid rush to judgment

“Chicken Little” approach Siege mentality Reliance on unverified information

You rarely end up where you thought you would upon initiation of an internal investigation

Do not ignore privileges and protections Do the work

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Doing Nothing is Risky Increased likelihood of diversion of attention from core

business activities Greater potential for harm to reputation Greater potential for harm to individuals Potentially greater financial penalties and sanctions (i.e.

suspension and/or exclusion) Lawsuits, including individual defendants Increased fees for counsel, consultants, experts Compliance with a government request for information

(even if ill-founded) can be expensive and resource intensive under any circumstances

Need to do the work and get a handle on situation before it becomes unwieldy and out of control

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Actual Failures Due to Lack of Investigation Compliance issues walk out the door-whistleblowers Demotions, counseling and bad evaluations after

compliance issues reported Promotions of employees who caused non-compliance Complaints dismissed because employee was rude,

incompetent, lazy, fill in the blank CFO knew of issue and commented, “if anyone finds out,

we’ll all go to jail” Multiple internal audit reports identified the issue and

management ignored it Administrator looked the other way because the

physician was a high admitter

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Practical Initial Questions

Differing agendas in integrated settings? Conflicts of interest? What is the time period at issue? What if there are collateral issues? Who are the point people internally? Who is and who is not on the team? How to preserve privilege? How much to reserve or escrow?

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Discussing The Scope Of The Internal Ivestigation

Subject matter to be addressed Who the law firm and investigative team will be

accountable to within the client organization The scope of the internal investigation and the proffer of

fact and/or legal conclusions

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Stakeholders Removed From Process

Independence Objectivity Candor Credibility Fairness Effective compliance program Anti-retaliation

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Actual Stakeholder Quotes

“I don’t want to be squeaky clean. Just clean enough.” “I don’t want to be a poster child for compliance.” “I can’t believe he admitted doing that.” “Oh, I thought you were against us. Now let me tell you

the real story.” “I can’t imagine a situation in which I would admit we’ve

done anything wrong.” “Your job is to keep [Compliance Officer] out of our

facility.”

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How Much Must You Investigate?

Depends on the facts Initially, need to investigate enough to

gauge the credibility of the allegation and to advise client as soon as possible Reliable and credible evidence Documentary evidence

Dollar amount of potential exposure impacts practical decisions regarding scope, depth, and personnel involved in investigation

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Who Should Investigate? Different categories of problems are best

investigated by different personnel: Human resources issues (such as sexual

harassment or discrimination) should generally be investigated by the HR Department and/or employment counsel

Other general issues (non-criminal in nature, unlikely to result in substantial civil liability) can be initially investigated in-house

Need to consider whether attorney-client privilege may be important – involve counsel (in-house and/or outside)

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Who Should Investigate?(Cont’d.)

Different categories of problems are best investigated by different personnel: Criminal issues or issues likely to result in significant

civil liability (whistleblower situations, high dollar overpayments, systemic problems) should not be investigated without the assistance of competent and experienced legal counsel and investigative team

Attorney-client privilege important – may want outside counsel involved to strengthen application of attorney-client privilege

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Getting Counsel Involved Expertise in white collar and health care compliance Familiarity with government enforcement and regulatory

personnel Conflicts of interest Government’s perception and credibility of organization Familiarity with organization and industry segment Cost Independence Objectivity Disruption to ordinary business activities Availability

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Solutions for these Challenges Regular counsel and consultants may not be the best

choice Build relationships and confidence in non-crisis situations Understand disconnect between clinical, regulatory,

business, and legal matters Don’t shoot from the hip Have an “investigation orientation” up front

Obtain buy-in on the process in advance Acknowledge and discuss these viewpoints Establish a provider’s non-delegable responsibility to

document, code, and bill correctly

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Considerations with Consultants

Scope of engagement Qualifications for specific assignment Privilege and work product protection Flow of information and coordination with counsel and

organization personnel

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Investigation Roadmap

Investigations generally should follow the same basic roadmap: Identify potential issues – those already identified,

others that should be investigated Identify individuals likely to have information, both

inside and outside the company Identify potentially relevant documents and institute

document “holds” to prevent destruction or disposal Identify individuals best suited to conduct

investigation (in-house resources or outside counsel and/or consultants)

Prepare investigation plan – the more serious the issue, the more detailed the plan

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Identifying Issues

What wrongdoing has already been indentified?

What other wrongdoing might be uncovered by an investigation?

Investigations always turn up additional facts and situations having ramifications for employees and organization.

Constant revision and modification of investigation “work plan”

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Identifying Issues

What are the potential risks and benefits of an investigation? Risks include costs and disruptions to ordinary course

of business – can be managed Risk/benefit of potentially uncovering unknown

additional issues and/or misconduct Benefits include potential advantages of early

disclosure, cooperation with any government investigation and potential for preferred treatment in charging decisions and under civil penalty provisions and sentencing guidelines

No substitute for knowing the facts

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Identify Relevant Documents

Obvious relevant documents

Less obvious (but still relevant) documents

Other communications (emails)

Notes and records of meetings. When? About what?

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Preserve Relevant Documents

Do not destroy documents Suspend routine document destruction Destroying relevant information could be viewed

as criminal obstruction Destroying relevant information could ultimately

lead to a negative inference by law enforcement, judge and/or jury as to why documents were destroyed

Issue litigation hold memo All persons likely to have potentially relevant

documents All potentially relevant documents (including

home computers of employees)

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Identify Investigative Personnel

Investigations of serious issues (large amounts at stake, criminal issues) should be managed by counsel

Who should direct counsel? Senior management (CEO, COO, General

Counsel?), but not “stakeholders” Board of Directors Audit or other independent committee of

the Board of Organization

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In-House or Outside Counsel?

Advantages to outside counsel: Bolster application of attorney/client and work

product privilege Preserves independence of investigation (and

appearance of independence) Likely more familiar with process for conducting

internal investigations Likely more familiar with government enforcement

tactics and priorities May have relationships with government enforcement

officials May be more familiar with the applicable laws,

regulations and the potential penalties and defenses

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In-House or Outside Counsel?

Advantages of in-house counsel: More familiar with internal policies of organization May have more credibility within the organization (not always

the case) May be more familiar with substantive laws and regulations

applied to day-to-day operations of business organization Even if outside counsel is engaged, in-house counsel can

play a key role Familiar with the organization-invaluable in identifying

appropriate document sources, interview candidates, and describing standard policies

Assist in gathering documents and other resources and keeping costs down

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Attorney-Client Privilege

Attorney-client privilege protects communications between an attorney and client Which were intended to be confidential Which were made for the purpose of obtaining legal

advice (not business advice) As to which confidentiality has not been waived by

disclosures to third parties or otherwise More difficult to demonstrate that communications to in-

house counsel meet each prong of this test – Advantage of using outside counsel

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Consultants & Others

Attorney-client privilege extends to agents retained by the attorney to assist in providing legal advice to the client Applies to secretaries and clerks Also applies to investigators, interviewers, technical experts,

accountants, consultants, and other specialists

Attorney-client privilege applies to communications with agents as if communications had been with attorney Between client and agent Between agent and attorney

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Prepare Investigation Plan

In consultation with client, attorney should prepare investigation plan Identify potential issues Identify individuals who may have relevant

information Identify potentially relevant documents

Revise investigation plan as needed Add additional issues Add additional individuals Add additional document sources/locations

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Conducting Investigation-Document Reviews

First step is to gather and review documents Authorized personnel should collect and deliver documents to

counsel (i.e. custodian of records) Track where documents came from Keep confidential documents confidential Identify “hot” documents

Documents that suggest wrongdoing Documents that are exculpatory Documents that raise questions and need further

clarification

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Conducting Investigation - Interviews

Interviews should be conducted in private To the extent practical, have witness

(associate/paralegal) present during interview to take notes and corroborate your understanding of facts and impressions of witness

Sometimes need independent witness for potential impeachable testimony

Keep notes of interview Do not record interviews Do not transcribe interviews May prepare written report describing facts of each interview

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Conducting Investigation – Interviews (Cont’d.) Management should only be present when necessary

(i.e. rarely) Employees must be advised that legal counsel represents

company, not employees individually and what they say may not be kept private (“UpJohn Warning” or “Corporate Miranda Warning”) Depending on the severity of the allegations and potential

culpability of the employee, you may choose to advise them of the potential need for their own counsel

In some instances, organization may pay for employee counsel

Employees must be encouraged to report if they have been threatened or asked to change their stories

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Investigation Complete

Counsel should report to client, including Discovered facts Remaining unknowns All implicated or potentially implicated laws, and Counsel’s analysis of the facts (and unknowns) in

light of those laws Report must remain confidential-limit circulation of

report-oral report preferred

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Internal Investigation Report

Oral or Written? Report “should” include a summary of the facts

Identify potential cause(s) of the incident Describe the incident in detail, including how it happened

and/or continued Identify financial impact and any health and safety matters Identify time period in question Identify individuals involved Identify individuals who should have detected non-

compliance Include at least an estimate of the magnitude of issue

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Fix the Problem

Using the report, identify corrective action needed to fix the problem

Need to assess compliance process and policies to identify deficiencies in existing compliance programs and reporting mechanisms

Responsible employees should be disciplined, as appropriate

Additional policies, procedures, or reporting layers should be added as necessary to promote future compliance

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Now What?

Need to discuss with client: Whether the past conduct needs to be disclosed and any

liability resolved with government. Options of self-disclosure – to whom? Department of

Justice, Attorney General, Insurance Commissioner?

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Voluntary Disclosures

Potential benefits:

Potential to avoid severe criminal liability

Potential to minimize civil exposure

Potential to neutralize whistleblower lawsuits

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Voluntary Disclosures

Potential harms:

Invites further detailed scrutiny to verify facts

May encourage government to require additional investigation

May result in penalties for conduct that would have remained undiscovered

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Is It “Voluntary?”

Misprision of a Felony – 18 U.S. C. § 4 provides that “whosoever…having knowledge…of a felony…conceals and does not as soon as possible make known the same…shall be fined…imprisoned…or both Requires active concealment

Medicare Statute – 42 U.S.C. § 1320a-7b(a)(3) arguably makes it a felony to conceal or “fail to disclose” facts affecting right to receive payment

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Is It “Voluntary?”

False Claims Act – Amendments to the FCA made as part of Fraud Enforcement and Recovery Act of 2009 (FERA) – 31 U.S.C. § 3729(a)(1)(G) Illegal to “knowingly conceal…or knowingly and improperly

avoid…or decrease…an obligation to pay or transmit money or property to the Government…

Presentment of claim not essential for False Claims Act Liability under Affordable Care Act

Affordable Care Act establishes “obligation” to report “identified” overpayment within sixty (60) days

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Disclosure Considerations

Decision to disclose should be made in conjunction with counsel, but is a business decision – weighing potential risks and benefits Where available, disclosure may offer protections too

significant to pass up Useful for substantial violations of law Leaves as an open question more minor or isolated

violations – time + expense + minimum settlement may make minor disclosures prohibitively costly

Continuing focus on compliance programs, good faith cooperation and prompt disclosure

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T H E E N D

QUESTIONS?

Doc # 4849 7340 7502